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How much can I save on my Spanish electricity bill now that VAT has been cut?

With welcome news that Spain will cut VAT on electricity from 10 percent to five percent to shield consumers from soaring inflation, how much can you expect to actually save?

Published: 23 June 2022 11:40 CEST
SPAIN-ELECTRICITY-VAT
Spain's Tax Agency estimates that the government has so far spent €3.8 billion on all tax cuts to lower electricity bills. Photo: DANIEL BOSQUE/AFP

On Wednesday June 22nd Spanish Prime Minister Pedro Sánchez announced a further reduction in VAT on electricity prices.

Speaking to the Spanish parliament, Sánchez explained that the VAT reduction, from 10 percent to five percent, would be approved at a cabinet meeting this weekend.

But this isn’t the first time that the Spanish government has taken direct action to tackle skyrocketing electricity prices.

Last year it also slashed the VAT rate on electricity 21 percent to 10 percent to try and soften impact of rising electricity price rises on consumers facing price increases across the board.

Facing criticism for his government’s record on helping consumers, Sánchez blamed “a war at the gates of Europe” for the rises, and said the latest cut will form part of a package of measures to try and stem the effects of inflation, which hit a staggering 8.7 percent in May, the highest level in Spain for decades.

READ MORE: Spain to cut electricity tax by half to ease inflation pain

But how much can you actually expect to save on your electricity bill following the news?

How much will I save?

While a cut to the VAT rate paid on electricity is welcome, in reality it seems the difference to electricity bills will be minimal.

According to experts, lowering VAT from 10 to 5 percent will mean savings of around €4 a month for households with an average consumption (270 kWH per month and a contracted power of 4 kW) on the regulated market.

Let’s look at an example. A household with consumption at 270 kWH per month would have paid €95.43 in the last 31 days. If VAT had been applied at 5 percent, as it will be under the government’s proposed cut, their monthly bill would have worked out €4.30 cheaper.

For comparison, if the government had not stepped in at all and no tax reductions of any kind had been applied, that same receipt would have been €109.6. 

How much will it cost the government?

Cutting VAT, although welcome and much needed by most consumers at the moment, does come at a cost. Officials from the Hacienda believe that lowering VAT to 5 percent will cost the public coffers up to €460 million in the next three months alone. 

Hacienda estimates that the government has so far spent €3.8 billion on all tax cuts to lower electricity bills.

Is it enough?

Is another VAT cut enough to recoup the difference and negate rising prices? Simply put, if wholesale electricity prices (something the Spanish government has no control over) continue to rise at the rate they have been, the prices passed onto the consumer will most likely make the cuts to VAT negligible.

At the start of June, the daily price of electricity began at €210/Mwh, but by this week this Thursday it had already climbed to €272/mWH – a 29.5 percent spike since the beginning of the month equivalent to €62 extra on bills.

With no end to war in Ukraine or the volatility on the energy market in sight, the Spanish government is searching for ways to ease the burden on consumers. Labour Minister Yolanda Díaz recently proposed slashing the price of monthly public transit passes by 50 percent and offering €300 to people hit hardest by rising prices.

READ MORE: Spain eyes €300 handouts for most vulnerable and further fuel reductions

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SPANISH TRADITIONS

Everything you need to know about Mother’s Day in Spain

Here's how and when in May Mother's Day is celebrated in Spain, and why it owes its roots to religion and a Valencian poet.

Published: 3 May 2024 13:37 CEST
Everything you need to know about Mother's Day in Spain

This year, Mother’s Day (El Día de la Madre) is celebrated in Spain on Sunday May 5th. It’s always celebrated on the first Sunday of the month of May.

On this day, young children in Spain give their mothers manualidades (crafts) they’ve made at school as a token of their love.

Husbands and older sons and daughters may buy their wives/mothers a present to say thanks for all that they do as matriarchs, which usually takes the form of a detalle (smaller present than for a birthday or Christmas), and will come accompanied by a message such as te quiero, mamá (I love you, mum).

According to experiences website Aladinia, the average Spaniards spends €65 on gifts on Mother’s Day. 

Other mums may send out text messages to wish each other ¡Feliz Día de la Madre! (Happy Mother’s Day!).

As it’s always celebrated on a Sunday, many shops will be closed but you can expect plenty of restaurants to be open for lunch and perhaps dinner. 

Depending where you’re from, the first Sunday of May may or may not be when you’re used to celebrating Mother’s Day in your home country.

Around the world over 100 countries celebrate Mother’s Day (or Mothering Sunday, more on the difference below) – 77 in May, 13 in March, and 14 at other times during the year.

Some countries, like the UK, celebrate Mothering Sunday on the fourth Sunday during Lent, meaning that the date changes each year. This is because Mothering Sunday was originally a Christian holiday in some European countries.

READ ALSO: How a female teacher campaigned for Spain to have a Father’s Day

Spain, however, celebrates Mother’s Day on the first Sunday in May each year, meaning that it doesn’t have a fixed date either. But it wasn’t always like that.

The history of Mother’s Day in Spain

The first Mother’s Day in Spain was celebrated in Madrid all the way back on October 4th, 1926. Much of the impetus for establishing a day to celebrate mothers came, rather fittingly, from a poet.

Julio Menéndez García, a Valencian poet and public servant, pushed for a special day to celebrate mothers. Spanish newspaper La Libertad published a short section on Garcìa’s efforts in October 1925:

“A Levantine poet, Julio Menéndez García, has had the happy initiative that in Spain and in the Spanish-speaking nations a day should be consecrated to extol the love of mothers. The establishment of Mother’s Day is something tender and sympathetic, which deserves to be welcomed by governments, the press and public opinion, as it involves the highest tribute to women in their most august representation.”

After the Civil War, the church moved the date to December 8th to coincide with the Feast of the Immaculate Conception, a key holiday among Catholics. 

Civil War-era poster urging Madrid mothers to leave the Spanish capital with their children before the arrival of Franco’s troops. (Photo by AFP)

But it wasn’t until 1965 that Mother’s Day was celebrated in May in Spain. The reason for this change of date was to separate the celebrations (both were considered important enough to have their own day) but also the influence of other countries, namely the United States.

The campaign for a Mother’s Day was originally started by Anna Jarvis, an American wanting to honour her mother, in 1908. By 1914, US President Woodrow Wilson officially signed it into law, establishing a May date. 

However, for many years in Spain department store El Corte Inglés maintained the date of 8th December, meaning that Spain Mother’s Day was celebrated twice a year for a while, commercially speaking at least.

In 1936 a local council in Breña Baja, on the Canary island of La Palma, became the first in Spain to move Mother’s Day to May.

However, in 1965 the church authorities officially decided to move Mother’s Day to May, a month consecrated to the Virgin Mary. May is also the month of female gods in the classical world, and in Catholicism is dedicated to the Virgin Mary.

Interestingly, Jarvis herself later campaigned against the day, arguing it had become overly commercialised, something Spaniards often bemoan about other imported American customs like Halloween and Valentine’s Day. 

READ ALSO: How a female teacher campaigned for Spain to have a Father’s Day

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